Sound Analysis: An Examination of the Canadian Independent Music Industry

Based largely on a 2011 survey of 502 music company representatives and 1,094 artists in Canada’s independent music industry, this report attempts to “determine the breadth and scope of the Canadian-owned, independent music industry as a whole and to measure its importance to both national and provincial economies”.

The survey results show that total revenues of independent music companies were $292 million in 2011. More than one-half of independent music companies (60%) have less than $50,000 in revenues, and almost one-half are sole proprietorships (46%).

Sound recording sales represent 25% of music company revenues, while live performances account for 15%. Almost three-quarters of all revenues (73%) are generated from the Canadian market. The survey found that digital formats represent 90% of all singles sold and 49% of albums sold. Despite the predominance of digital formats, revenues from digital sales account for only 47% of sound recording revenues. On the other hand, physical albums and singles represent a much larger share of revenues than sales count.

Regarding music company expenditures, “employee wages (and associated costs) account for the largest segment of company expenditures (25%)”. Music company employees earned, on average, $22,250 in 2011. Non-employee labour costs represent another 12% of expenditures, while royalties represent 13%.

A breakdown of music company activities shows that:

About one-half of all companies (47%) maintain a stable of artists, with representation of artists within the same province being most common. The number of new artist signings has grown from 273 in 2009 to 448 in 2011. About 80% of all signings are Canadian artists.

“38% of independent music industry companies in Canada perform some music label activities”. These companies had between 1,300 and 1,400 releases each year between 2009 and 2011, of which about one-half were Canadian releases.

Almost one-third of independent music companies (29%) perform some type of publishing activities. In 2009, these companies signed almost 52,000 “musical works or songs to publishing deals”, including about 4,000 Canadian signings (8% of the total). By 2011, the number of signings decreased substantially (to 36,100), but the number of Canadian ones increased significantly (to almost 11,000, or 29% of the total).

The survey found that, in addition to playing music, most artists (60%) also produce it. Overall, “artists generated $79.4 million in music-related revenue in 2011”, representing an average of was just over $7,200 for each artist. Artists spent an average of 29 hours per week on music-related activities.

In terms of economic impact, the report finds that “the total GDP impact of the independent music industry was $303 million in 2011”, with the largest contributions coming from record companies (28% of the total) and artists (24%). The report also finds that the independent music industry had an employment impact of about 13,500 full-time equivalent jobs in 2011, two-thirds of which are artists.

Regarding federal and provincial tax revenue, the report estimates that $93 million in government revenues were generated by the independent music industry in 2011. Examined differently, this means that the independent music industry generated $1.22 in tax revenue for every $1 of government support.

Summary:

Based largely on a 2011 survey of 502 music company representatives and 1,094 artists in Canada’s independent music industry, this report attempts to “determine the breadth and scope of the Canadian-owned, independent music industry as a whole and to measure its importance to both national and provincial economies”. The survey results show that total revenues of independent music companies were $292 million in 2011. More than one-half of independent music companies (60%) have less than $50,000 in revenues, and almost one-half are sole proprietorships (46%).